Brooklyn Homes Are Selling Faster Than Manhattan’s

Homebuyers are facing more competition in Brooklyn than in Manhattan, new data released Friday suggest.

The property supply in Brooklyn fell 13.1% year-over-year in the second quarter, according to a new market report published by StreetEasy. Conversely, supply grew by 1.2% over the same period in Manhattan, led by an 8.6% inventory increase in the Downtown submarket.

“Buyers turning to Brooklyn should be aware that they may be avoiding sky-high prices, but they are certainly not avoiding competition,” StreetEasy economist Krishna Rao said.

In the luxury segment, which in StreetEasy’s metrics starts at $2.607 million in Manhattan and $1.075 million in Brooklyn, sales inventory went up the most in the submarkets of Midtown (21.7%) and Upper Midtown (20.3%).

The deepest fall in high-end supply in the two boroughs occurred in northwest Brooklyn, which includes Downtown Brooklyn, Brooklyn Heights, Dumbo and Red Hook. Supply in this submarket fell by 14.7% year-over-year in the second quarter, suggesting greater competition for homes.

All in all, Northwest Brooklyn’s luxury market—with prices up, inventory down and days on market unchanged—seems strong, while Midtown and Manhattan’s Upper West Side—where prices are slowing, inventory is up and days on market on the rise for the Upper West Side—appear weak, reported StreetEasy.

“While there are still pockets of strength among submarkets in Manhattan and Brooklyn, particularly in neighborhoods like Battery Park City, Carroll Gardens, Boerum Hill and Gowanus, overall, the luxury market continued to suffer in the second quarter this year,” Mr. Rao said.

The increased competition is good news for sellers in Brooklyn. According to StreetEasy, sellers received all or more than their asking price in approximately 50% of the borough’s neighborhoods that the company tracks. Manhattan sellers received a median of 98.2% of their asking price, led by the Upper Manhattan submarket at 100%.

While properties are still more expensive in Manhattan, would-be buyers in Brooklyn encounter prices for residential properties overall that are growing at a faster pace.

The median resale price in Brooklyn increased by 5.9%, to $561,438, in the second quarter, compared with the same period in 2015. Prices in East Brooklyn increased by 13.7%, the only double-digit growth of any submarket across the two boroughs.

On the other hand, the median sale price in Manhattan increased by 2.8%, to $995,522, over the same period. The period from March through June marked the fourth consecutive quarter of slowing annual price growth for Manhattan, said StreetEasy, which expects prices there to continue to slow over the next 12 months.

In the luxury tier, the median resale price fell most sharply in South Brooklyn (-7.43%) and went up by its highest yearly margin in North Brooklyn (7.77%). That submarket, which includes Williamsburg and Greenpoint, saw an abundance of development and change over the past few years in the face of increasing demand, Mr. Rao said.

Furthermore, while forecasting slower price growth for Brooklyn overall in the next year, StreetEasy expects values in North Brooklyn to increase by 8.6%, the most of any submarket in the borough, with resale prices exceeding $1 million.

“Both North and Northwest Brooklyn provide coveted access to waterfront views, but neighborhoods such as Red Hook and Gowanus (in Northwest Brooklyn) present interesting and relatively untapped potential as their industrial façades begin to give way to luxury residential redevelopment,” Mr. Rao told Mansion Global. “This is an area that presents a lot of opportunity for buyers and sellers alike.”

Sellers in Brooklyn are also finding buyers faster: Homes in the borough went into contract in a median of 41 days, eight days faster than homes in Manhattan.

Still, a cooling New York City luxury market, amid a glut of inventory, could force sellers to start cutting prices.

“As the most expensive homes linger on the market, inventory in this tier is beginning to build up amid waning demand,” Mr. Rao said. “Sellers in areas like the Upper West Side, Midtown and Downtown in Manhattan and neighborhoods in North Brooklyn may need to consider price cuts as they adjust to the reality of a softening market.”